“According to ‘Directive No. 2337’ of People’s Committee of Ho Chi Minh City, enterprises that do not meet the Covid-19 prevention requirements will be temporarily closed. This a part of the authorities’ efforts to deal with the COVID-19 situation and control the spread of the disease in industrial parks, export processing zones, high-tech parks and other enterprises.”
Enterprises must ensure that work and isolation of on-site workers is at the same premises i.e. on-site production, on-site dining, and on-site resting. Otherwise, enterprises must transport workers only from the production site to the residence of workers at dormitories, hotels etc.
Thus, from midnight of 15/7/2021, enterprises that do not meet the above requirements must stop their operations until further directions. This caused many obstacles for enterprises operating during social distancing enforcement in Ho Chi Minh City.
Except for those who can allow employees to work from home, other enterprises may postpone signing labor contracts or granting unpaid leaves. Thus, to reduce the burden on employers and employees, the government has issued ‘Decision No. 23/2021/QD-TTg’ on July 7, 2021 for providing assistance and support to employees and employers facing difficulties due to the pandemic. Accordingly, if the employee meets the conditions and participated in compulsory social insurance in the month preceding the suspension of the labor contract, they will receive allowance. This reduces the burden on businesses and prevents the postponement of labor contracts. Therefore, enterprise owners shall promptly list down employees who will be suspended from work due to the pandemic and submit the same to the competent state agencies to receive assistance and support.
Few major reductions in social assistance to employees have taken place during the pandemic:
Not only employees, even enterprises face difficulties in performing contracts signed with their partners. Whether the enterprise is exempt from contractual obligations during the pandemic depends on the specific situation of the enterprise. The exemption is determined by the occurrence of an “event of force majeure” which is defined as an unforeseen event which could not be prevented despite taking all necessary measures. In order to prove that the enterprise cannot perform its contractual obligations during the COVID-19 pandemic, the enterprise needs to include the provisions in the contract pertaining to inability to perform or delay in performance of the contract and must also include the terms related to the occurrence of force majeure events in the contract.
If an enterprise is affected by a force majeure event, the first thing that the enterprise should note is to review the terms in the agreements signed with any party. An important thing to remember is to notify and prove on a valid basis that the business has sought to limit the effects of the event. It is the non-implementation of the contracts which leads to claims of damages and penalties for breach of contract by partners and customers.
Enterprises that have suffered financially due to the pandemic are considered to be experiencing force majeure events. Thus, exemptions have been provided to suspend the obligations arising from contracts signed with customers or partners.
Writing time: 16/07/2021
The article is based on applicable law at the time noted above and may no longer be relevant at the time the reader approaches this article due to the change in applicable law and the specific case in which the reader wishes to apply. Therefore, the article has only reference values.